Santa Ana reaches settlement in downtown funding dispute

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SANTA ANA City officials approved a settlement Tuesday that resulted in dismantling a downtown improvement district.

The City Council, faced with potential litigation, voted to adopt an ordinance to dismantle a downtown district that relied on property assessments and directed staff to revive a business improvement district that relied on business license surcharges for marketing and other efforts aimed at boosting downtown business.

“The agreement provides for the continuance and funding of programs critical to downtown Santa Ana while dissolving the politically controversial community management district and property assessment,” according to a statement from Downtown Inc.

For years, a number of downtown business owners have lobbied the City Council to dismantle what is formally called the Downtown Santa Ana Community Management District. It's informally called the PBID, for property-based improvement district. Under a 2009 agreement with the city, Downtown Inc. manages the PBID, which pays for enhanced security, cleanup and marketing of the downtown area.

Since the first assessments were levied in 2010, the PBID has been criticized by some business owners. They said they have received assessments of as much as $9,000 a year. Opponents said the assessments largely benefited a few downtown bars and restaurants.

“Downtown Incorporated and its board are pleased that the city has demonstrated its continued support of economic development in the downtown and has committed to fund that effort directly,” said Ryan Chase, chairman of the Downtown Inc. board. “We look forward to this era of renewed cooperation.”

Under terms of an agreement approved in closed session, the city agreed to several measures, including funding Clean & Safe programs for three years at a cost of $400,000 per year and co-sponsoring five Downtown Inc. events each year. Clean & Safe programs provide enhanced security and cleanup efforts.

“Downtown Inc. will take over the management of safe/clean, but there will be an advisory board made up of two city employees, two merchants and two Downtown Inc. representatives to oversee that the program continues to meet the needs of downtown,” said Vicky Baxter, executive director of Downtown Inc. “DTI is picking up all the administrative costs to manage safe/clean daily and the organization of the advisory committee.”

The City Council since July had difficulty mustering a quorum to deal with the fate of the PBID, in part because ex-Councilman Carlos Bustamante missed several meetings following his arrest on a series of sex-related charges, in part because some council members had declared conflicts of interest. It was unable to approve special assessments for the 2012-13 tax roll on a deadline set by the Orange County Auditor-Controller's office.

Both Mayor Miguel Pulido and Councilman Vincent F. Sarmiento later got the OK to participate. Councilwoman Michele Martinez abstained Tuesday because of a conflict of interest, making the votes 6-0.

The council's actions cleared the way for city staff to begin work on resurrecting the business improvement district, which had initially been created in 1984 to provide a way of funding promotion, security and maintenance downtown. Assessments haven't been levied under it since 2007.

Downtown Inc. said it had received $750,000 annually from the property assessment. A business license assessment could generate $125,000 annually if the council and businesses approve it. It's unclear where that money would go, but it would be used for marketing and events.

According to a city staff report, some 623 business downtown could become part of the renewed improvement district. The city would notify them of its intent to levy assessments, ballots would be sent out and then a public hearing would be held. If a majority of potentially affected businesses protest, the proceeding would end. If a majority responds favorably, the City Council could adopt a resolution approving the assessments.

Downtown Inc. expects the approval process to take four to six months. It will rely on voluntary contributions and fundraising even after the business license assessment begins.

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